Total Cost Reporting: what it is and why it matters to you

The investment landscape is in a state of constant flux.

It’s also in a state of generational growth.

You only have to look no further than here in Canada, where, according to a recent study, we have the highest rate of Gen Z investors (74% of which report to having at least one type of investment). Interestingly enough, ‘curiosity’ is the main driver enticing this demographic to enter the markets—and along with that curiosity comes a heightened demand for transparency.

That’s where Total Cost Reporting comes in.

Launching January 1, 2026, Total Cost Reporting (TCR) is the next phase of amendments to a set of existing regulations established by the Canadian Securities Administrators (CSA) that are designed to provide better transparency to investors.

As you may recall, the most recent of these changes took place back in 2016/2017 with the launch of CRM2 (Client Relationship Model – Phase 2), which required Canadian investment firms, dealers, and advisors to disclose detailed account performance and all embedded costs (i.e. fees, commissions, etc.).

TCR is basically CRM3—and goes one step further in providing transparency to investors.

Building on the positive impacts of CRM2, Total Cost Reporting makes it easier to see these embedded costs and would apply to a wider range of securities and funds. This broader scope includes mutual funds, exchange-traded funds (ETFs), and segregated funds—which are insurance-based funds that, so far, have flown under the radar.

TCR also translates to mandatory reporting of the entire Management Expense Ratio (MER).

This means not only outlining the trailing commissions (as with CRM2), but also all management fees, operating expenses, and taxes. Furthermore, this information needs to be outlined in the report as both a percentage for each fund class or series—and as an aggregate amount in dollars.

Additionally, Total Cost Reporting requires disclosure in both annual cost and performance reports, as well as in monthly or quarterly client account statements.

TCR will also require certain notifications that must be provided to investment clients including:

• How fund expenses are deducted
• Statement about any action that may be available to a client
• Information about deferred sales charges—and that approximations/
  assumptions are used in calculating costs (if applicable)
• Noting that third-party fees (such as custodial/intermediary fees or interest
  charges) may not be included
• Explanation of any other direct fund charges

By having greater visibility into the full scope of charges that come with investing, you will be able to assess the value of any and all (investment) advice you receive.

This will allow you to compare products, features, and services based on cost information—putting you in a better position to make informed decisions based on what’s right for you. Greater fee transparency may also lead to increased price competition among financial institutions and investment firms, which could perhaps lead to lower fees for investors down the road.

Ultimately, transparency is a critical cornerstone in building confidence and trust.

It’s why Educators Financial Group made the decision to report our entire MER (on Educators funds) back when CRM2 first came into effect—way ahead of our competitors and the January 2026 TCR timeline. That transparency also extends to the educator-specific financial advice we’ve been providing to clients each and every day for half a century. Because the more you know, the greater your money will grow, and the closer you’ll get to making your financial dreams a reality.

Have questions regarding Total Cost Reporting? Let’s chat about it. 

Learn more how our investment reports meet the highest standards for transparency and information

 

Source:

FINRA Foundation-CFA Institute Research Focuses on Gen Z Investors | FINRA.org